Business secretary Vince Cable has urged BG shareholders to vote against a ‘golden hello’ pay packet for the company’s new chief executive, Helge Lund.
Earlier this week, the Investment Management Association (IMA), whose members manage more than £5trillion of assets on behalf of UK and overseas clients, issued a “red top” warning.
According to a report, Mr Cable said: “We have given shareholders the power to vote this kind of excessive pay down and they have got to use it.”
Legal and General – one of the biggest investment businesses in the UK – also raised concerns about the offer to Helge Lund, who takes the helm at BG in March.
Mr Lund, who has been likened to Real Madrid and Portuguese footballer Cristiano Ronaldo because of his superstar status in the global oil and gas industry, is to get a £12million “golden hello” in shares and the chance to earn £13.5million a year if he hits performance targets.
His last job was as chief executive of Norway’s Statoil, which he transformed during his 10-year stint.
He left Statoil in October, giving up a £1.5million salary to go to BG, which has its headquarters in Reading.
BG shareholders will meet on December 15 to vote on the conditional award of shares to Mr Lund.
In a recent circular to investors, the group said: “The company has consulted extensively with shareholders about Mr Lund joining BG Group and the proposed remuneration package.
“Shareholders have overwhelmingly welcomed the appointment, supporting the view that Mr Lund has the necessary skills and experience to lead BG Group.”
The circular sets out factors that will be used to assess his personal performance, adding: “The board believes that the package is structured in a way which will drive excellent business and financial performance across the group and promote the long-term success of the company.
“Approximately 80% of Mr Lund’s proposed annual remuneration package is subject to company and personal performance conditions.” The company advised shareholders to back the pay deal, saying Mr Lund was ideally suited to lead BG Group because of his “strong track record, skills and experience as a leading oil and gas industry chief executive”.
A spokesman for BG said the £13.5million part of the overall pay deal, which includes a £1.5million salary, was at the top end of Mr Lund’s potential pay in the job.
The figure is more likely to be around £9million, the “median CEO package for the global oil and gas industry”, he added.
IMA refused to comment on the reasons for its red top alert, its most serious warning on corporate governance breaches.
L&G, which owns 2.7% of BG, is unhappy that Mr Lund’s remuneration is a departure from a three-year pay policy approved by shareholders earlier this year.
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